Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is designed to provide material information relevant to an assessment of Danaher Corporation’s (“Danaher,” the “Company,” “we,” “us” or “our”) financial condition and results of operations, including an evaluation of the amounts and certainty of cash flows from operations and from outside sources. The MD&A is designed to focus specifically on material events and uncertainties known to management that are reasonably likely to cause reported financial information not to be necessarily indicative of future operating results or of future financial condition. This includes descriptions and amounts of matters that have had a material impact on reported operations, as well as matters that are reasonably likely based on management’s assessment to have a material impact on future operations. The Company’s MD&A is divided into five sections:

• Information Relating to Forward-Looking Statements

• Overview

• Results of Operations

• Liquidity and Capital Resources

• Critical Accounting Estimates

You should read this discussion along with the Company’s MD&A and audited financial statements and Notes thereto as of and for the year ended December 31, 2022, included in the Company’s 2022 Annual Report and the Company’s Consolidated Condensed Financial Statements and related Notes as of and for the three-month period ended March 31, 2023 included in this Quarterly Report on Form 10-Q (“Report”).

INFORMATION RELATING TO FORWARD-LOOKING STATEMENTS

Certain statements included or incorporated by reference in this Report, in other documents we file with or furnish to the Securities and Exchange Commission, in our press releases, webcasts, conference calls, materials delivered to shareholders and other communications, are “forward-looking statements” within the meaning of the U.S. federal securities laws. All statements other than historical factual information are forward-looking statements, including without limitation statements regarding: projections of revenue, expenses, profit, profit margins, pricing, tax rates, tax provisions, cash flows, pension and benefit obligations and funding requirements, our liquidity position or other projected financial measures; management’s plans and strategies for future operations, including statements relating to anticipated operating performance, cost reductions, restructuring activities, new product and service developments, competitive strengths or market position, acquisitions and the integration thereof, divestitures, spin-offs, split-offs, initial public offerings, other securities offerings, or other distributions, strategic opportunities, stock repurchases, dividends and executive compensation; growth, declines and other trends in markets we sell into; new or modified laws, regulations and accounting pronouncements; future regulatory approvals and the timing and conditionality thereof; outstanding claims, legal proceedings, tax audits and assessments and other contingent liabilities; future foreign currency exchange rates and fluctuations in those rates; the potential or anticipated direct or indirect impact of COVID-19 on our business, results of operations and/or financial condition; general economic and capital markets conditions; the anticipated timing of any of the foregoing; assumptions underlying any of the foregoing; and any other statements that address events or developments that Danaher intends or believes will or may occur in the future. Terminology such as “believe,” “anticipate,” “should,” “could,” “intend,” “will,” “plan,” “expect,” “estimate,” “project,” “target,” “may,” “possible,” “potential,” “forecast” and “positioned” and similar references to future periods are intended to identify forward-looking statements, although not all forward-looking statements are accompanied by such words.

Forward-looking statements are based on assumptions and assessments made by our management in light of their experience and perceptions of historical trends, current conditions, expected future developments and other factors. Forward-looking statements are not guarantees of future performance and actual results may differ materially from the results, developments and business decisions contemplated by our forward-looking statements. Accordingly, you should not place undue reliance on any such forward-looking statements. Important factors that in some cases have affected us in the past and that in the future could cause actual results to differ materially from those envisaged in the forward-looking statements include the following:

Business and Strategic Risks

• The COVID-19 pandemic has adversely impacted and could in the future continue to adversely impact elements of our business and financial statements. Other conditions in the global economy, the particular markets we serve and the financial markets can also adversely affect our business and financial statements.

• We face intense competition and if we are unable to compete effectively, we may experience decreased demand and decreased market share. Even if we compete effectively, we may be required to reduce the prices we charge.

• Our growth depends on the timely development and commercialization, and customer acceptance, of new and enhanced products and services based on technological innovation. Our growth can also suffer if the markets into which we sell our products and services decline, do not grow as anticipated or experience cyclicality.

• The healthcare industry and related industries that we serve are undergoing significant changes in an effort to reduce (and increase the predictability of) costs, which can adversely affect our business and financial statements.

• Non-U.S. economic, political, legal, compliance, social and business factors (such as the military conflict between Russia and Ukraine) can negatively affect our business and financial statements.

• Collaborative partners and other third-parties we rely on for development, supply and/or marketing of certain products, potential products and technologies could fail to perform sufficiently.

Acquisitions, Divestitures and Investment Risks

• Any inability to consummate acquisitions at our historical rate and appropriate prices, and to make appropriate investments that support our long-term strategy, could negatively impact our business.

• Our acquisition of businesses, investments, joint ventures and other strategic relationships could also negatively impact our business and financial statements and our indemnification rights may not fully protect us from liabilities related thereto.

• We intend to separate our Environmental & Applied Solutions (“EAS”) segment to create a publicly-traded company, to be known as Veralto Corporation (“Veralto”), in the fourth quarter of 2023 (the “EAS Separation”). The proposed transaction may not be completed on the currently contemplated timeline or at all and may not achieve the intended benefits.

• Divestitures or other dispositions (including the anticipated EAS Separation) could negatively impact our business, and contingent liabilities from EAS or from businesses that we or our predecessors have previously disposed could adversely affect our business and financial statements. For example, we could incur significant liability if the EAS Separation or any of the split-off or spin-off transactions we have previously consummated are determined to be a taxable transaction or otherwise pursuant to our indemnification obligations with respect to such transactions.

Operational Risks

• Significant disruptions in, or breaches in security of, our information technology (“IT”) systems or data; data privacy violations; other losses or disruptions to facilities, supply chains, distribution systems or IT systems due to catastrophe; and labor disputes can all adversely affect our business and financial statements.

• Defects and unanticipated use or inadequate disclosure with respect to our products or services, or allegations thereof, can adversely affect our business and financial statements.

• Our financial results are subject to fluctuations in the cost and availability of the supplies (including commodities) we use in, and the labor we need for, our operations. Over the past year, we have at times experienced to varying degrees supply chain disruptions including in some cases shortages of supply, cost inflation and shipping delays, labor availability constraints and labor cost increases.

• Climate change, legal or regulatory measures to address climate change and any inability to address stakeholder expectations with respect to climate change, may negatively affect us.

• Our success depends on our ability to recruit, retain and motivate talented employees representing diverse backgrounds, experiences and skill sets.

• Our restructuring actions can have long-term adverse effects on our business and financial statements.

Intellectual Property Risks

• Any inability to adequately protect or avoid third-party infringement of our intellectual property, and third-party claims we are infringing intellectual property rights, can adversely affect our business and financial statements.

• The U.S. government has certain rights with respect to incremental production capacity attributable to, and/or the intellectual property we have developed using, government financing. In addition, in times of national emergency the U.S. government has authority to control our allocation of manufacturing capacity.

Financial and Tax Risks

• Our outstanding debt has increased significantly as a result of acquisitions, and we may incur additional debt. Such indebtedness may limit our operations and use of cash flow and negatively impact our credit ratings; and failure to comply with our indebtedness-related covenants could adversely affect our business and financial statements.

• Our business and financial statements can be adversely affected by foreign currency exchange rates, changes in our tax rates (including as a result of changes in tax laws) or income tax liabilities/assessments, the outcome of tax audits, financial market risks related to our defined benefit pension plans, health care costs and recognition of impairment charges for our goodwill or other intangible assets.

Legal, Regulatory, Compliance and Reputational Risks

• Significant developments or changes in national laws or policies to protect or promote domestic interests and/or address foreign competition can have an adverse effect on our business and financial statements.

• Our businesses are subject to extensive regulation (including those applicable to the healthcare industry). Failure to comply with those regulations (including by our employees, agents or business partners) or significant developments or changes in laws or policies can adversely affect our business and financial statements.

• With respect to the regulated medical devices we offer, product introductions or modifications may require regulatory clearance or authorizations and we could be required to recall or cease marketing such products; off-label marketing could result in penalties; and clinical trials may have results that are unexpected or are perceived unfavorably by the market, all of which could adversely affect our business and financial statements.

• We are subject to or otherwise responsible for a variety of litigation and other legal and regulatory proceedings in the course of our business that can adversely affect our business and financial statements.

• Our operations, products and services also expose us to the risk of environmental, health and safety liabilities, costs and violations that could adversely affect our business and financial statements.

• Our By-law exclusive forum provisions could limit our stockholders’ ability to choose their preferred judicial forum for disputes.

See “Part I—Item 1A. Risk Factors” of the Company’s 2022 Annual Report for further discussion regarding reasons that actual results may differ materially from the results, developments and business decisions contemplated by our forward-looking statements. Forward-looking statements speak only as of the date of the report, document, press release, webcast, call, materials or other communication in which they are made. Except to the extent required by applicable law, we do not assume any obligation to update or revise any forward-looking statement, whether as a result of new information, future events and developments or otherwise.

OVERVIEW

General

As a result of the Company’s geographic and industry diversity, the Company faces a variety of opportunities and challenges, including rapid technological development in most of the Company’s served markets, the expansion and evolution of opportunities in high-growth markets, trends and costs associated with a global labor force, consolidation of the Company’s competitors and increasing regulation. The Company operates in a highly competitive business environment in most markets, and the Company’s long-term growth and profitability will depend in particular on its ability to expand its business in high-growth geographies and high-growth market segments, identify, consummate and integrate appropriate acquisitions and identify and consummate appropriate investments and strategic partnerships, develop innovative and differentiated new products and services with higher gross profit margins, expand and improve the effectiveness of the Company’s sales force, continue to reduce costs and improve operating efficiency and quality and effectively address the demands of an increasingly regulated global environment. The Company is making significant investments, organically and through acquisitions and investments, to address the rapid pace of technological change in its served markets and to globalize its manufacturing, research and development and customer-facing resources (particularly in high-growth markets) to be responsive to the Company’s customers throughout the world and improve the efficiency of the Company’s operations.

Business Performance and Outlook

During the first quarter of 2023, the Company’s overall revenues decreased 7.0% compared to the comparable period of 2022. Core sales decreased 4.0% in the first quarter of 2023 compared to the comparable prior year period due primarily to the decline of demand for COVID-19-related products, partially offset by increases in demand for other products. The impact of currency translation decreased reported sales 3.0% in the first quarter of 2023 compared to the comparable prior year period. For the definition of “core sales” refer to “—Results of Operations” below.

Geographically, the Company saw a decrease in core sales in the developed markets, partially offset by an increase in core sales in the high-growth markets during the first quarter of 2023 compared to the first quarter of 2022. Developed markets core sales decreased at a mid-single digit rate, driven primarily by declines in core sales in North America primarily driven by reduced demand for products and services related to vaccine and therapeutics production and diagnostic testing associated with COVID-19. High-growth markets core sales increased at a low-single digit rate as declines in China were offset by growth in other regions. High-growth markets represented approximately 29% of the Company’s total sales in the first quarter of 2023. For additional information regarding the Company’s sales by geographical region during the three-month periods ended March 31, 2023 and April 1, 2022, refer to Note 4 to the accompanying Consolidated Condensed Financial Statements.

The Company’s net earnings for the three-month period ended March 31, 2023 totaled approximately $1.5 billion, compared to approximately $1.7 billion for the three-month period ended April 1, 2022. Net earnings attributable to common stockholders for the three-month period ended March 31, 2023 totaled approximately $1.4 billion or $1.94 per diluted common share, compared to approximately $1.7 billion or $2.31 per diluted common share for the three-month period ended April 1, 2022. Decreased core sales and the adverse impact of foreign currency exchange rates in the 2023 period drove the year-over-year decrease in net earnings and diluted net earnings per common share for the three-month period ended March 31, 2023.

In an effort to moderate inflationary pressure, the U.S. Federal Reserve and other central banks around the world have raised interest rates, which has tightened the global credit environment. While the Company’s interest costs and liquidity have not been significantly impacted by this credit tightening due to the significant cash flow generated from the Company’s operations and the predominantly fixed-interest rates of the Company’s outstanding borrowings, the credit tightening has adversely impacted demand at certain of the Company’s customers, including emerging biotechnology companies.

The COVID-19 Pandemic

The Company continues to actively monitor the COVID-19 pandemic. While conditions related to the pandemic generally have improved in 2023 compared to 2022, conditions vary by geography. During the fourth quarter of 2022, China eased many COVID-19 related restrictions and began experiencing increased COVID-19 related cases. This resulted in lower patient volumes for elective procedures and wellness visits as hospitals prioritized treating COVID-19 related cases, which in turn resulted in reduced demand for many of the Company’s non-COVID-19 products and services in China. These higher COVID-19 related cases in China continued into the early part of the first quarter of 2023.

The Company has also deployed our capabilities, expertise and scale to address the critical health needs related to COVID-19, including making available diagnostic tests for the rapid detection of COVID-19 and support for production of vaccines and therapies for COVID-19. Demand for the Company’s products that support COVID-19 related vaccines and therapeutics (including related to research and development that seeks to prevent or mitigate similar, future pandemics) decreased in the first quarter of 2023 versus the comparable period of 2022. The Company expects overall demand for these products to continue to decrease in 2023 compared to 2022 as the pandemic continues to subside in most geographies and evolve towards endemic status. Additionally, demand for the Company’s products that support COVID-19 testing is expected to continue to fluctuate, corresponding to fluctuations in COVID-19 cases in particular geographies. In response to COVID-19 evolving to an endemic status, the Company expects to continue to review and adjust its cost structure, particularly within the Diagnostics and Biotechnology segments.

On April 10, 2023, the U.S. announced that the public health emergency related to COVID-19 ended. The Company does not anticipate significant impact from the expiration of the public health emergency.

For additional information on the risks of COVID-19 to the Company’s operations, refer to the “Item 1A. Risk Factors” section of the Company’s 2022 Annual Report.

Proposed Separation of the Environmental & Applied Solutions Business

For a description of Danaher’s plan to separate its Environmental & Applied Solutions business into a publicly traded company, see “Results of Operations—Environmental & Applied Solutions.”

Currency Exchange Rates

On a year-over-year basis, currency exchange rates negatively impacted reported sales by approximately 3.0% for the three-month period ended March 31, 2023 compared to the comparable period of 2022, primarily due to the strengthening of the U.S. dollar against the euro and most other major currencies in 2023. If the currency exchange rates in effect as of March 31, 2023 were to prevail throughout the remainder of 2023, currency exchange rates would decrease the Company’s estimated first half 2023 sales by approximately 1.5% and full year 2023 sales would be essentially flat relative to 2022. Further strengthening of the U.S. dollar against other major currencies compared to the exchange rates in effect as of March 31, 2023 would adversely impact the Company’s sales on an overall basis, and any weakening of the U.S. dollar against other major currencies compared to the exchange rates in effect as of March 31, 2023 would positively impact the Company’s sales and results of operations for the remainder of the year.

RESULTS OF OPERATIONS

Non-GAAP Measures

In this report, references to the non-GAAP measures of core sales (also referred to as core revenues or sales/revenues from existing businesses) refer to sales calculated according to U.S. GAAP, but excluding:

• sales from acquired businesses (as defined below, as applicable); and

• the impact of currency translation.

References to sales or operating profit attributable to acquisitions or acquired businesses refer to sales or operating profit, as applicable, from acquired businesses recorded prior to the first anniversary of the acquisition less any sales and operating profit, during the applicable period, attributable to divested product lines not considered discontinued operations. The portion of revenue attributable to currency translation is calculated as the difference between:

• the period-to-period change in revenue (excluding sales from acquired businesses (as defined above, as applicable)); and

• the period-to-period change in revenue (excluding sales from acquired businesses (as defined above, as applicable)) after applying current period foreign exchange rates to the prior year period.

Core sales growth should be considered in addition to, and not as a replacement for or superior to, sales, and may not be comparable to similarly titled measures reported by other companies. Management believes that reporting this non-GAAP financial measure provides useful information to investors by helping identify underlying growth trends in Danaher’s business and facilitating comparisons of Danaher’s revenue performance with its performance in prior and future periods and to Danaher’s peers. Management also uses this non-GAAP financial measure to measure the Company’s operating and financial performance and uses core sales growth as one of the performance measures in the Company’s executive short-term cash incentive compensation program. The Company excludes the effect of currency translation from this measure because currency translation is not under management’s control, is subject to volatility and can obscure underlying business trends, and excludes the effect of acquisitions and divestiture-related items because the nature, size, timing and number of acquisitions and divestitures can vary dramatically from period-to-period and between the Company and its peers and can also obscure underlying business trends and make comparisons of long-term performance difficult.

Throughout this discussion, references to sales growth or decline refer to the impact of both price and unit sales and references to productivity improvements generally refer to improved cost-efficiencies resulting from the ongoing application of the Danaher Business System.

Sales (Decline) Growth and Core Sales (Decline) Growth

			% Change Three-Month Period Ended March 31, 2023 vs. Comparable 2022 Period
Total sales (decline) growth (GAAP)			(7.0)		%
Impact of:
Currency exchange rates			3.0		%
Core sales (decline) growth (non-GAAP)			(4.0)		%

2023 Sales Compared to 2022

Total sales decreased 7.0% during the three-month period ended March 31, 2023 compared to the three-month period ended April 1, 2022, primarily as a result of the decrease in core sales due to the factors discussed below by segment. The impact of currency translation decreased reported sales 3.0% on a year-over-year basis during the three-month period ended March 31, 2023, primarily due to the unfavorable impact of the strengthening of the U.S. dollar against the euro and most other major currencies in 2023. Price increases contributed 3.0% to sales growth on a year-over-year basis during the three-month period ended March 31, 2023, and are reflected as a component of core sales decline above.

Operating Profit Performance

Operating profit margins decreased 330 basis points from 28.3% during the three-month period ended April 1, 2022 to 25.0% for the three-month period ended March 31, 2023.

First quarter 2023 vs. first quarter 2022 operating profit margin comparisons were favorably impacted by:

• First quarter 2022 impairments of accounts receivable and inventory as well as accruals for contractual obligations in Russia - 55 basis points

First quarter 2023 vs. first quarter 2022 operating profit margin comparisons were unfavorably impacted by:

• Lower first quarter 2023 core sales, the impact of product mix and incremental year-over-year costs associated with sales and marketing growth initiatives, net of incremental year-over-year cost savings associated with material, transportation and labor costs and restructuring and continuing productivity improvement initiatives - 330 basis points

• First quarter 2023 costs incurred related to preparation for the anticipated separation of the Company's Environmental & Applied Solutions business - 40 basis points

• The incremental dilutive effect in 2023 of acquired businesses - 15 basis points

Business Segments

Sales by business segment for each of the periods indicated were as follows ($ in millions):

			Three-Month Period Ended
			March 31, 2023						April 1, 2022
Biotechnology			$	1,864					$	2,216
Life Sciences			1,709						1,666
Diagnostics			2,376						2,644
Environmental & Applied Solutions			1,218						1,162
Total			$	7,167					$	7,688

For information regarding the Company’s sales by geographical region, refer to Note 4 to the accompanying Consolidated Condensed Financial Statements.

BIOTECHNOLOGY

The Biotechnology segment includes the bioprocessing and discovery and medical businesses and offers a broad range of tools, consumables and services that are primarily used by customers to advance and accelerate the research, development, manufacture and delivery of biological medicines. The biotherapeutics that the Company’s solutions support range from replacement therapies such as insulin, vaccines, recombinant proteins and other biologic drugs, to novel cell, gene, mRNA and other nucleic acid therapies.

Biotechnology Selected Financial Data

			Three-Month Period Ended
($ in millions)			March 31, 2023						April 1, 2022
Sales			$	1,864					$	2,216
Operating profit			596						800
Depreciation			40						44
Amortization of intangible assets			217						214
Operating profit as a % of sales			32.0		%				36.1		%
Depreciation as a % of sales			2.1		%				2.0		%
Amortization as a % of sales			11.6		%				9.7		%

Sales (Decline) Growth and Core Sales (Decline) Growth

			% Change Three-Month Period Ended March 31, 2023 vs. Comparable 2022 Period
Total sales (decline) growth (GAAP)			(16.0)		%
Impact of:
Currency exchange rates			3.0		%
Core sales (decline) growth (non-GAAP)			(13.0)		%

Price increases in the segment contributed 3.5% to sales growth on a year-over-year basis during the three-month period ended March 31, 2023 and are reflected as a component of core sales decline above.

Total segment sales decreased 16.0% during the three-month period, led by decreased core sales resulting from the factors discussed below and by the impact of changes in currency exchange rates. Core sales in the bioprocessing business decreased during the three-month period across most major geographies primarily due to declining demand for COVID-19 related therapeutics and vaccines and as customers continued the repurposing of inventory initially purchased for COVID-19 therapeutics and vaccines. This decline was offset in part by increased core sales for non-COVID-19 related products. The Company expects the impact of reduced COVID-19 demand and reduction of inventory levels to continue into the second half of 2023. Additionally, the tightening credit environment contributed to a reduction in demand from emerging biotechnology companies during the quarter. Core sales in the discovery and medical business decreased during the three-month period due to decreased sales in lab filtration, medical and diagnostics and genomics product lines, partially offset by growth in protein research products. Geographically, core sales decreased in North America.

Operating Profit Performance

Operating profit margins decreased 410 basis points during the three-month period ended March 31, 2023 as compared to the comparable period of 2022.

First quarter 2023 vs. first quarter 2022 operating profit margin comparisons were favorably impacted by:

• First quarter 2022 impairments of accounts receivable and inventory in Russia - 60 basis points

First quarter 2023 vs. first quarter 2022 operating profit margin comparisons were unfavorably impacted by:

• Lower first quarter 2023 core sales, the impact of product mix, a year-over-year increase in sales and marketing growth initiatives and higher amortization expense, net of lower incremental year-over-year costs associated with material, transportation and labor, restructuring and continuing productivity improvement initiatives - 455 basis points

• The incremental dilutive effect in 2023 of acquired businesses - 15 basis points

Amortization of intangible assets as a percentage of sales increased during the three-month period ended March 31, 2023 as compared with 2022 primarily as a result of the decrease in sales and increased year-over year amortization from the change of a trade name from indefinite-lived to definite-lived.

LIFE SCIENCES

The Life Sciences segment offers a broad range of instruments and consumables that are primarily used by customers to study the basic building blocks of life, including DNA and RNA, nucleic acid, proteins, metabolites and cells, in order to understand the causes of disease, identify new therapies, and test and manufacture new drugs, vaccines and gene editing technologies.

Additionally, the segment provides products and consumables used to filter and remove contaminants from a variety of liquids and gases in many end-market applications.

Life Sciences Selected Financial Data

			Three-Month Period Ended
($ in millions)			March 31, 2023						April 1, 2022
Sales			$	1,709					$	1,666
Operating profit			321						318
Depreciation			29						28
Amortization of intangible assets			105						107
Operating profit as a % of sales			18.8		%				19.1		%
Depreciation as a % of sales			1.7		%				1.7		%
Amortization as a % of sales			6.1		%				6.4		%

Sales Growth and Core Sales Growth

			% Change Three-Month Period Ended March 31, 2023 vs. Comparable 2022 Period
Total sales growth (GAAP)			2.5		%
Impact of:
Acquisitions/divestitures			(1.0)		%
Currency exchange rates			3.5		%
Core sales growth (non-GAAP)			5.0		%

Price increases in the segment contributed 4.5% to sales growth on a year-over-year basis during the three-month period ended March 31, 2023 and are reflected as a component of core sales growth.

Total segment sales increased 2.5% during the three-month period, led by increased core sales resulting from the factors discussed below, and acquisitions, partially offset by the impact of changes in currency exchange rates. Total segment core sales were impacted by the decline in COVID-19 related sales. Core sales for the Company’s flow cytometry, genomics, lab automation, centrifugation, particle counting and characterization business increased in the three-month period, primarily due to increased demand in the flow cytometry, particle counting and centrifugation product lines, partially offset by lower demand for automation and genomic products related to COVID-19. Geographically, core sales increased in Western Europe and China, partially offset by lower sales in North America. Core sales in the mass spectrometry business increased during the three-month period led by life science research, clinical and service end-markets. Geographically, the increase in core sales was driven by increased demand for consumables in China and Western Europe, partially offset by lower sales in North America. Core sales for the genomic consumables businesses decreased due to reduced demand for COVID-19 related products, partially offset by increased demand for non-COVID-19 related products. Geographically, the decrease in core sales was driven by North America, partially offset by increased demand in Western Europe. Core sales for the industrial filtration business increased due to strong demand for these products across all major geographies and all major end-markets.

Operating Profit Performance

Operating profit margins decreased 30 basis points during the three-month period ended March 31, 2023 as compared to the comparable period of 2022.

First quarter 2023 vs. first quarter 2022 operating profit margin comparisons were favorably impacted by:

• First quarter 2022 impairments of accounts receivable and inventory as well as accruals for contractual obligations in Russia - 145 basis points

First quarter 2023 vs. first quarter 2022 operating profit margin comparisons were unfavorably impacted by:

• The impact of product mix and incremental year-over-year costs associated with material, transportation and labor and sales and marketing growth initiatives, net of higher first quarter 2023 core sales and the incremental year-over-year cost savings associated with restructuring and continuing productivity improvement initiatives - 130 basis points

• The incremental dilutive effect in 2023 of acquired businesses - 45 basis points

Amortization of intangible assets decreased as a percentage of sales during the three-month period ended March 31, 2023, primarily as a result of the increase in sales.

DIAGNOSTICS

The Diagnostics segment offers clinical instruments, reagents, consumables, software and services that hospitals, physicians’ offices, reference laboratories and other critical care settings use to diagnose disease and make treatment decisions.

Diagnostics Selected Financial Data

			Three-Month Period Ended
($ in millions)			March 31, 2023						April 1, 2022
Sales			$	2,376					$	2,644
Operating profit			677						886
Depreciation			93						94
Amortization of intangible assets			50						51
Operating profit as a % of sales			28.5		%				33.5		%
Depreciation as a % of sales			3.9		%				3.6		%
Amortization as a % of sales			2.1		%				1.9		%

Sales (Decline) Growth and Core Sales (Decline) Growth

			% Change Three-Month Period Ended March 31, 2023 vs. Comparable 2022 Period
Total sales (decline) growth (GAAP)			(10.0)		%
Impact of:
Currency exchange rates			2.5		%
Core sales (decline) growth (non-GAAP)			(7.5)		%

Price increases in the segment contributed 1.0% to sales growth on a year-over-year basis during the three-month period ended March 31, 2023 and are reflected as a component of core sales decline.

Total segment sales decreased 10.0% during the three-month period, primarily as a result of decreased core sales resulting from the factors discussed below, particularly lower year-over-year core sales of molecular diagnostics tests for COVID-19, which contributed significantly to the decline in overall segment core sales, and the impact of changes in currency exchange rates. During the three-month period, core sales in the molecular diagnostics business decreased on a year-over-year basis across most major geographic regions as the business experienced declines in sales of diagnostic test solutions for COVID-19, partially offset by increased sales of non-respiratory disease tests. Core sales in the segment’s clinical lab business increased on a year-over-year basis, led by increased sales in the immunoassay product line. Geographically, the increase in core sales was driven by North America and China. Core sales in the acute care diagnostic business increased year-over-year in the three-month period primarily due to increased demand for its blood gas measurement product line. Geographically, demand increased across all major geographies, led by China. Core sales in the pathology business increased year-over-year driven by advanced staining and core histology and consumables in the three-month period, led geographically by Western Europe, North America and China.

Operating Profit Performance

Operating profit margins decreased 500 basis points during the three-month period ended March 31, 2023 as compared to the comparable period of 2022.

First quarter 2023 vs. first quarter 2022 operating profit margin comparisons were favorably impacted by:

• First quarter 2022 impairments of accounts receivable and accruals for contractual obligations in Russia - 10 basis points

First quarter 2023 vs. first quarter 2022 operating profit margin comparisons were unfavorably impacted by:

• Lower first quarter 2023 core sales, the impact of product mix and the incremental year-over-year costs associated with sales and marketing growth initiatives, net of incremental year-over-year cost savings associated with restructuring and continuing productivity improvement initiatives - 510 basis points

ENVIRONMENTAL & APPLIED SOLUTIONS

The Environmental & Applied Solutions segment is a provider of essential technology solutions that safeguard many of the world's most vital resources and support customers to address large global challenges including environmental resource sustainability, water scarcity, management of severe weather events, food and pharmaceutical security and the impact of an aging workforce. The Company’s water quality business provides proprietary precision instrumentation and advanced water treatment technologies to help measure, analyze and treat the world’s water in residential, commercial, municipal, industrial, research and natural resource applications. In addition to instrumentation, the water quality businesses also provide chemical reagents, services and digital solutions. The Company’s product identification business provides marking and coding, and packaging and color instrumentation and related consumables for brand owners and consumer packaged goods companies that enable speed to market as well as traceability and quality control of their products. The product identification business’s solutions help customers across consumer, pharmaceutical and industrial sectors to bring products to market, mark packaging in compliance with industry and regulatory standards and convey the safety of products to their customers.

Environmental & Applied Solutions Selected Financial Data

			Three-Month Period Ended
($ in millions)			March 31, 2023						April 1, 2022
Sales			$	1,218					$	1,162
Operating profit			299						236
Depreciation			10						11
Amortization of intangible assets			12						14
Operating profit as a % of sales			24.5		%				20.3		%
Depreciation as a % of sales			0.8		%				0.9		%
Amortization as a % of sales			1.0		%				1.2		%

Sales Growth and Core Sales Growth

			% Change Three-Month Period Ended March 31, 2023 vs. Comparable 2022 Period
Total sales growth (GAAP)			5.0		%
Impact of:
Acquisitions/divestitures			(0.5)		%
Currency exchange rates			2.0		%
Core sales growth (non-GAAP)			6.5		%

Price increases in the segment contributed 5.0% to sales growth on a year-over-year basis during the three-month period ended March 31, 2023 and are reflected as a component of core sales growth.

Total segment sales increased 5.0% during the three-month period primarily as a result of core sales growth driven by the factors discussed below and acquisitions, partially offset by the impact of changes in currency exchange rates.

Core sales in the segment’s water quality businesses increased at a low-double digit rate during the three-month period ended March 31, 2023, compared to the comparable period of 2022. Year-over-year core sales in the analytical instrumentation product line increased in the three-month period driven by increased core sales in the municipal and industrial end-markets. Geographically, the increase in core sales was led by North America and Western Europe. Core sales in the business’ chemical treatment solutions product line increased during the three-month period as a result of increased core sales across most major end-markets. Geographically, the increase in core sales of chemical treatment solutions was driven by North America.

Core sales in the segment’s product identification businesses increased at a low-single digit rate during the three-month period ended March 31, 2023, compared to the comparable period of 2022. Core sales in the marking and coding business were essentially flat during the three-month period as increased demand in the food and beverage end-market was offset by lower demand in the consumer packaging end-market. Geographically, increased core sales in Western Europe were offset by lower core sales in North America and Russia. For the packaging and color solutions products and services, core sales increased in the three-month period, geographically led by North America and Western Europe.

In September 2022, the Company announced its intention to separate its Environmental & Applied Solutions business into a publicly traded company, to be known as Veralto Corporation. The Environmental & Applied Solutions business had sales for the year ended December 31, 2022 of approximately $4.8 billion. The transaction is expected to be tax-free to the Company’s shareholders. The Company is targeting to complete the planned separation of the Environmental & Applied Solutions business in the fourth quarter of 2023, subject to the satisfaction of certain conditions, including obtaining final approval from the Danaher Board of Directors, satisfactory completion of financing, receipt of tax opinions, receipt of favorable rulings from the Internal Revenue Services (“IRS”) and receipt of other regulatory approvals. Until the completion of the planned separation, the Environmental & Applied Solutions business will be reported as continuing operations.

Operating Profit Performance

Operating profit margins increased 420 basis points during the three-month period ended March 31, 2023 as compared to the comparable period of 2022. The following factors favorably impacted year-over-year operating profit margin:

• Higher first quarter 2023 core sales and incremental year-over-year cost savings associated with restructuring and continuing productivity improvement initiatives, net of incremental year-over-year costs associated with material, transportation and labor initiatives and sales and marketing growth initiatives - 395 basis points

• The incremental net accretive effect in 2023 of acquired businesses - 15 basis points

• First quarter 2022 impairments of accounts receivable and inventory in Russia - 10 basis points

COST OF SALES AND GROSS PROFIT

			Three-Month Period Ended
($ in millions)			March 31, 2023						April 1, 2022
Sales			$	7,167					$	7,688
Cost of sales			(2,797)						(2,983)
Gross profit			$	4,370					$	4,705
Gross profit margin			61.0		%				61.2		%

The year-over-year decrease in cost of sales during the three-month period ended March 31, 2023 as compared to the comparable period in 2022, was due primarily to the impact of lower year-over-year sales volumes.

Year-over-year gross profit margin decreased during the three-month period ended March 31, 2023 as compared to the comparable period in 2022 due primarily to lower core sales and the impact of product mix.

OPERATING EXPENSES

			Three-Month Period Ended
($ in millions)			March 31, 2023						April 1, 2022
Sales			$	7,167					$	7,688
Selling, general and administrative (“SG&A”) expenses			2,147						2,092
Research and development (“R&D”) expenses			429						441
SG&A as a % of sales			30.0		%				27.2		%
R&D as a % of sales			6.0		%				5.7		%

SG&A expenses as a percentage of sales increased for the three-month period ended March 31, 2023 as compared to the comparable period in 2022, driven primarily by the impact of decreased leverage of the Company’s general and administrative cost base, including amortization expense, resulting from lower 2023 sales, as well as costs incurred related to preparation for the anticipated separation of the Company’s Environmental & Applied Solutions business, continued investments in sales and marketing growth initiatives and increased labor costs.

R&D expenses (consisting principally of internal and contract engineering personnel costs) as a percentage of sales increased during the three-month period ended March 31, 2023 as compared to the comparable period of 2022, primarily due to the year-over-year sales decline and the timing of new product development initiatives.

OTHER INCOME (EXPENSE), NET

For a description of the Company’s other income (expense), net during the three-month periods ended March 31, 2023 and April 1, 2022, refer to Note 7 to the accompanying Consolidated Condensed Financial Statements.

INTEREST COSTS AND FINANCING

For a discussion of the Company’s outstanding indebtedness, refer to Note 10 to the accompanying Consolidated Condensed Financial Statements.

Interest expense of $68 million for the three-month period ended March 31, 2023, was $14 million higher than the comparable period of 2022, due primarily to higher average interest rates on the Company’s outstanding Euro-denominated commercial paper borrowings in the three-month period in 2023 versus the comparable period of 2022. For a discussion of the Company’s cross-currency swap derivative contracts, refer to Note 11 to the accompanying Consolidated Condensed Financial Statements.

Interest income of $48 million for the three-month period ended March 31, 2023 was $47 million higher than the comparable period of 2022, due primarily to higher average interest rates and higher average cash balances in 2023 compared to 2022.

INCOME TAXES

The following table summarizes the Company’s effective tax rate:

			Three-Month Period Ended
			March 31, 2023						April 1, 2022
Effective tax rate			19.4		%				17.8		%

The Company operates globally, including in certain jurisdictions with lower tax rates than the U.S. federal statutory rate. Therefore, the impact of operating in such jurisdictions contributes to a lower effective tax rate compared to the U.S. federal statutory tax rate.

The effective tax rate for the three-month period ended March 31, 2023 differs from the U.S. federal statutory rate of 21.0% principally due the geographic mix of earnings described above and net discrete benefits of $5 million related primarily to excess tax benefits from stock-based compensation and the release of reserves for uncertain tax positions due to the expiration of statutes of limitation, partially offset by tax costs related to the planned separation of the Environmental & Applied Solutions business and changes in estimates associated with prior period uncertain tax positions. The net discrete benefits reduced the effective tax rate by 0.3% for the three-month period ended March 31, 2023.

The effective tax rate for the three-month period ended April 1, 2022 differs from the U.S. federal statutory rate of 21.0% principally due to net discrete benefits of $41 million related primarily to excess tax benefits from stock-based compensation and changes in estimates associated with prior period uncertain tax positions. These factors reduced the effective tax rate by 2.0% for the three-month period ended April 1, 2022.

The Company conducts business globally, and files numerous consolidated and separate income tax returns in federal, state and foreign jurisdictions. In addition to the Company’s significant presence in the U.S., the Company also has a significant presence in China, Denmark, Germany, Singapore, Sweden, Switzerland and the United Kingdom (“UK”). Excluding these jurisdictions, the Company believes that a change in the statutory tax rate of any individual foreign country would not have a material impact on the Company’s financial statements given the geographical dispersion of the Company’s taxable income.

The Company and its subsidiaries are routinely examined by various domestic and international taxing authorities. The IRS has completed the examinations of substantially all of the Company’s federal income tax returns through 2015 and is currently examining certain of the Company’s federal income tax returns for 2016 through 2018. In addition, the Company has subsidiaries in Belgium, Canada, China, Denmark, France, Germany, India, Italy, Japan, Korea, Switzerland, the UK and various other countries, states and provinces that are currently under audit for years ranging from 2004 through 2021.

In the fourth quarter of 2022, the IRS proposed significant adjustments to the Company’s taxable income for the years 2016 through 2018 with respect to the deferral of tax on certain premium income related to the Company’s self-insurance programs. For income tax purposes, the recognition of premium income has been deferred in accordance with U.S. tax laws related to insurance. The IRS challenged the deferral of premium income for certain types of the Company’s self-insurance policies. The proposed adjustments would have increased the Company’s taxable income over the 2016 through 2018 periods by approximately $2.5 billion. In the first quarter of 2023, the Company settled these proposed adjustments with the IRS, although the audit is still open with respect to other matters for the 2016 through 2018 period. The impact of the settlement with respect to the Company’s self-insurance policies was not material to the Company’s financial statements, including cash flows and the effective tax rate. As the settlement with the IRS was specific to the audit period, the settlement does not preclude the IRS from proposing similar adjustments to the Company’s self-insurance programs with respect to periods subsequent to 2018. Management believes the positions the Company has taken in its U.S. tax returns are in accordance with the relevant tax laws.

The Company expects its effective tax rate for the remainder of 2023 to be approximately 19.5%. The Company’s effective tax rate could vary as a result of many factors, including but not limited to the following:

• The expected rate for the remainder of 2023 includes the anticipated discrete income tax benefits from excess tax deductions related to the Company’s stock compensation programs, which are reflected as a reduction in tax expense, though the actual benefits (if any) will depend on the Company’s stock price and stock option exercise patterns.

• The actual mix of earnings by jurisdiction could fluctuate from the Company’s projection.

• The tax effects of other discrete items, including accruals related to tax contingencies, the resolution of worldwide tax matters, tax audit settlements, statute of limitations expirations and changes in tax regulations.

• Any future changes in tax law or the implementation of recently proposed increases in tax rates, the impact of future regulations and any related additional tax planning efforts to address these changes.

As a result of the uncertainty in predicting these items, it is reasonably possible that the actual effective tax rate used for financial reporting purposes will change in future periods.

Refer to Note 6 to the Consolidated Condensed Financial Statements for discussion regarding the Company’s significant tax matters.

COMPREHENSIVE INCOME

In 2023, comprehensive income increased $180 million for the three-month period ended March 31, 2023 as compared to the comparable period of 2022, primarily driven by income from foreign currency translation adjustments and income from cash flow hedge adjustments, partially offset by lower net earnings in the year-over-year period. The Company recorded foreign currency translation gains of $25 million and losses of $343 million for the three-month periods ended March 31, 2023 and April 1, 2022, respectively. The Company recorded gains of $81 million from cash flow hedge adjustments related to the Company’s cross-currency swap derivative contracts for the three-month period ended March 31, 2023 as compared to losses of $20 million for the comparable period of 2022.

LIQUIDITY AND CAPITAL RESOURCES

Management assesses the Company’s liquidity in terms of its ability to generate cash to fund its operating, investing and financing activities. The Company continues to generate substantial cash from operating activities and believes that its operating cash flow, cash on hand and other sources of liquidity will be sufficient to allow it to continue investing in existing businesses (including capital expenditures), consummating strategic acquisitions and investments, paying interest and servicing

debt, paying dividends, funding restructuring activities, repurchasing common stock and managing its capital structure on a short-term and long-term basis.

The Company has relied primarily on borrowings under its commercial paper program to address liquidity requirements that exceed the capacity provided by its operating cash flows and cash on hand, while also accessing the capital markets from time to time including to secure financing for more significant acquisitions. Subject to any limitations that may result from market disruptions, the Company anticipates following the same approach in the future.

Overview of Cash Flows and Liquidity

Following is an overview of the Company’s cash flows and liquidity ($ in millions):

			Three-Month Period Ended
($ in millions)			March 31, 2023						April 1, 2022
Total operating cash provided by operations			$	1,947					$	1,968
Cash paid for acquisitions			$	—					$	(17)
Payments for additions to property, plant and equipment			(275)						(250)
Proceeds from sales of property, plant and equipment			—						2
Payments for purchases of investments			(43)						(274)
Proceeds from sales of investments			1						17
All other investing activities			13						19
Total cash used in investing activities			$	(304)					$	(503)
Payments for the issuance of common stock in connection with stock-based compensation, net			$	(34)					$	(46)
Payment of dividends			(204)						(191)
Net (repayments of) proceeds from borrowings (maturities of 90 days or less)			(4)						10
All other financing activities			(20)						(47)
Total cash used in financing activities			$	(262)					$	(274)

• Operating cash flows decreased $21 million, or 1%, during the three-month period ended March 31, 2023 as compared to the comparable period of 2022, as lower net earnings from continuing operations (after excluding in both periods charges for depreciation, amortization, stock compensation and unrealized investment gains/losses) were partially offset by lower cash used in aggregate for accounts receivables, inventories, trade accounts payable and prepaid and accrued expenses, including deferred taxes, in 2023 compared to the prior year.

• Net cash used in investing activities consisted primarily of capital expenditures and investments and decreased year-over-year primarily as a result of lower cash paid for acquisitions and investments in the 2023 period compared to 2022.

• As of March 31, 2023, the Company held approximately $7.4 billion of cash and cash equivalents.

Operating Activities

Cash flows from operating activities can fluctuate significantly from period-to-period as working capital needs and the timing of payments for income taxes, restructuring activities and productivity improvement initiatives, pension funding and other items impact reported cash flows.

Operating cash flows were approximately $1.9 billion for the first three months of 2023, a decrease of $21 million, or 1%, as compared to the comparable period of 2022. The year-over-year change in operating cash flows from 2022 to 2023 was primarily attributable to the following factors:

• 2023 operating cash flows reflected a decrease of $275 million in net earnings for the first three months of 2023 as compared to the comparable period in 2022.

• Net earnings for the first three months of 2023 also reflected a decrease of $55 million of depreciation, intangible asset amortization, stock compensation expense and unrealized investment gains/losses as compared to the comparable period of 2022. Amortization expense primarily relates to the amortization of intangible assets. Depreciation expense

relates to the Company’s manufacturing and operating facilities as well as instrumentation leased to customers under operating-type lease (“OTL”) arrangements. Depreciation, amortization and stock compensation are noncash expenses that decrease earnings without a corresponding impact to operating cash flows. Unrealized investment gains/losses impact net earnings without immediately impacting cash flows as the cash flow impact from investments occurs when the invested capital is returned to the Company.

• The aggregate of trade accounts receivable, inventories and trade accounts payable provided $146 million in operating cash flows during the first three months of 2023, compared to $482 million of operating cash flows used in the comparable period of 2022. The amount of cash flow generated from or used by the aggregate of trade accounts receivable, inventories and trade accounts payable depends upon how effectively the Company manages the cash conversion cycle, which effectively represents the number of days that elapse from the day it pays for the purchase of raw materials and components to the collection of cash from its customers and can be significantly impacted by the timing of collections and payments in a period.

• The aggregate of prepaid expenses and other assets, deferred income taxes and accrued expenses and other liabilities used $263 million of operating cash flows during the first three months of 2023, compared to $56 million of operating cash flows provided in the comparable period of 2022. The timing of cash payments for various employee-related liabilities, customer funding and changes in accrued expenses drove the majority of this change.

Investing Activities

Cash flows relating to investing activities consist primarily of cash used for acquisitions and capital expenditures, including instruments leased to customers, cash used for investments and cash proceeds from divestitures of businesses or assets.

Net cash used in investing activities decreased approximately $199 million in the three-month period ended March 31, 2023 compared to the comparable period of 2022, primarily as a result of a decrease in cash used for the purchase of investments. In the first three months of 2023 and 2022, the Company invested $43 million and $274 million, respectively, in non-marketable equity securities and partnerships.

Capital expenditures are made primarily for increasing manufacturing capacity, replacing equipment, supporting new product development, improving information technology systems and the manufacture of instruments that are used in OTL arrangements that certain of the Company’s businesses enter into with customers. Capital expenditures decreased $25 million on a year-over-year basis for the three-month period ended March 31, 2023 compared to the comparable period in 2022. For the full year 2023, the Company forecasts capital spending to be approximately $1.5 billion, driven primarily by continued expenditures to support customer demand.

Financing Activities and Indebtedness

Cash flows relating to financing activities may consist of cash flows associated with the issuance and repayments of commercial paper, issuance and repayment of long-term debt, borrowings under committed credit facilities, issuance and repurchases of common stock, issuance of preferred stock and payments of cash dividends to shareholders. Financing activities used cash of $262 million during the three-month period ended March 31, 2023 compared to $274 million of cash used in the comparable period of 2022. The year-over-year decrease in cash used by financing activities was due to lower payments related to the issuance of common stock and lower all other financing activities, partially offset by higher payments of dividends and net repayment of borrowings in 2023.

For a description of the Company’s outstanding debt as of March 31, 2023 and the Company’s commercial paper programs and credit facility, refer to Note 10 to the accompanying Consolidated Condensed Financial Statements. As of March 31, 2023, the Company was in compliance with all of its respective debt covenants.

As discussed in Note 14 in the accompanying Consolidated Condensed Financial Statements all outstanding shares of the Company’s 4.75% MCPS Series A and 5.00% MCPS Series B converted to common shares on April 15, 2022 and April 17, 2023, respectively. The Company’s 4.75% MCPS Series A converted to common shares at a rate of 6.6632 common shares per share of preferred stock. The Company’s 5.00% MCPS Series B converted to common shares at a rate of 5.0175 common shares per share of preferred stock.

Stock Repurchase Program

For information regarding the Company’s stock repurchase program, refer to Part II—Item 2, “Unregistered Sales of Equity Securities and Use of Proceeds”.

Dividends

Aggregate cash payments for dividends on Company common stock during the three-month period ended March 31, 2023 were $182 million and aggregate cash payments for dividends on the Company’s MCPS during the three-month period ended March 31, 2023 were $22 million. The increase in dividend payments for common stock over the comparable period of 2022 primarily relates to the increase in the quarterly dividend rate for common stock beginning with respect to the dividend paid in the second quarter of 2022. The decrease in MCPS dividend payments compared to the comparable period of 2022 primarily relates to the conversion of all outstanding shares of the Company’s 4.75% MCPS Series A to common shares on April 15, 2022.

In the first quarter of 2023, the Company declared a regular quarterly dividend of $0.27 per share of Company common stock payable on April 28, 2023 to holders of record as of March 31, 2023. In addition, the Company declared a quarterly cash dividend of $12.50 per MCPS Series B that was paid on April 17, 2023 to holders of record as of March 31, 2023.

Cash and Cash Requirements

As of March 31, 2023, the Company held approximately $7.4 billion of cash and cash equivalents that were held on deposit with financial institutions or invested in highly liquid investment-grade debt instruments with a maturity of 90 days or less. Of the cash and cash equivalents, approximately $3.7 billion was held within the United States and approximately $3.7 billion was held outside of the United States. The Company will continue to have cash requirements to support general corporate purposes, which may include working capital needs, capital expenditures, acquisitions and investments, paying interest and servicing debt, paying taxes and any related interest or penalties, funding its restructuring activities and pension plans as required, paying dividends to shareholders, repurchasing shares of the Company’s common stock and supporting other business needs.

The Company generally intends to use available cash and internally generated funds to meet these cash requirements, but in the event that additional liquidity is required, the Company may also borrow under its commercial paper programs (if available) or borrow under the Company’s Five-Year Facility, enter into new credit facilities and either borrow directly thereunder or use such credit facilities to backstop additional borrowing capacity under its commercial paper programs (if available) and/or access the capital markets (if available). The Company also may from time to time seek to access the capital markets to take advantage of favorable interest rate environments or other market conditions. With respect to the commercial paper and other notes scheduled to mature during the remainder of 2023, the Company expects to repay the principal amounts when due using available cash, proceeds from new issuances of commercial paper (if available), drawing on its Five-Year Facility and/or proceeds from other debt issuances.

While repatriation of some cash held outside the United States may be restricted by local laws, most of the Company’s foreign cash could be repatriated to the United States. Following enactment of the Tax Cuts and Jobs Act and the associated Transition Tax, in general, repatriation of cash to the United States can be completed with no incremental U.S. tax; however, repatriation of cash could subject the Company to non-U.S. taxes on distributions. The cash that the Company’s non-U.S. subsidiaries hold for indefinite reinvestment is generally used to finance foreign operations and investments, including acquisitions. The income taxes, if any, applicable to such earnings including basis differences in our foreign subsidiaries are not readily determinable. As of March 31, 2023, management believes that it has sufficient sources of liquidity to satisfy its cash needs, including its cash needs in the United States.

During 2023, the Company’s cash contribution requirements for its U.S. and non-U.S. defined benefit pension plans are forecasted to be approximately $10 million and $37 million, respectively. The ultimate amounts to be contributed depend upon, among other things, legal requirements, underlying asset returns, the plan’s funded status, the anticipated tax deductibility of the contribution, local practices, market conditions, interest rates and other factors.

CRITICAL ACCOUNTING ESTIMATES

There have been no material changes to the Company’s critical accounting estimates as described in the 2022 Annual Report.